Delays in arrival of 3.5 million tons (mt) of imported wheat for the public distribution system in South India and the lack of traction from importers to import wheat at discounted 5% customs duty is resulting in higher prices in the open market. Reports suggest that pulses and sugar are no better.
Globally there is a shortage of pulses since India, Pakistan, and Bangladesh
have all reported lower production and Myanmar, the largest exporter, is unable
to meet the global demand. Although there seems to be
higher than expected sugar production in the country, retail prices remain exorbitantly high at Rs. 21 a kilogram.
With the festival season coming up and national surveys showing
high levels of dissatisfaction with inflation, the Government is worried that its import liberalization and agriculture policy is not working. Therefore, there are leaks that suggest that the Government may re-introduce stock-holding limits under the Essential Commodities Act to coerce speculators to release stocks being held to artificially pump up the price. The Government may also bring import duties to 0% to encourage importers to bring in wheat.
Of the 3.5 mt wheat contracted to be delivered in May, only 92,000 tons have come in that too of dubious quality. Another .339 mt arrived recently but only .24 mt have been offloaded and still need to be shipped to several areas of the South. Reportedly, another .172 mt is on its way and is expected to reach the nation by end of the month. Private traders have imported only .12 mt of the 2.2 mt wheat they have obtained permission for because they expect the Government to panic and bring import duty down to 0%. Although Government estimates domestic production levels at 68.5 mt, businesses dispute this number. Clearly, the tardy import, offloading, and transportation of wheat coupled with policy-making paralysis in agriculture ministry have pushed the prices up substantially by 11% in New Delhi to 77% in Thiruvanathapuram and most states are reporting 55% price inflation. Despite high inflationary retail rates, procurement contract rates were as much as 3% below spot rates and are expected to fall further when imports do arrive.
Retail prices of pulses have also increased because of only .444 mt imports compared to 1.608 mt last year. Although the National Agricultural Cooperative Marketing Federation (NADED) had contracted 25,000 tons of 8 Urad Dal and 5,000 tons of Moong, only a total of 3,880 tons have actually been delivered.
Despite continuous confusion on agricultural policy and availability figures, there is very little debate in the Parliament or the mainstream press because the issue is not of immediate worry. Instead, unproductive and non-strategic issues continue to hog attention.